The Organisation for Economic Cooperation and Development (OECD) has suggested a worsening condition for the UK economy
According to their latest report, the UK is set to be the worst-performing economy in the G7 next year, a consequence of high-interest rates and inflationary pressures.
UK growth prediction
The OECD devalued its growth prediction for the UK this year to 0.4%, with persistent price rises in the services sector and shortages of skilled staff.
Looking ahead to 2025, growth is predicted to reach 1%, staying behind other G7 nations like the US and Canada, both predicted to grow at 1.8%.
The Bank of England’s expected delay in cutting interest rates from 5.25% until the autumn further worsens the challenges faced by the UK economy. This delay is caused by fears of potential rebounds in price growth, prolonging the nation’s struggle to promote economic rates.
The global economy
The OECD highlights a more optimistic outlook for the global economy, with a steady growth projection of 3.1% in 2024 and a slight increase to 3.2% in 2025. Stronger growth in household incomes and lower interest rates are noted as factors contributing to this global upturn.
In contrast to the UK’s performance, other major economies like France, Germany, and the US are witnessing growth upgrades for 2024. Despite Germany’s expansion rate following behind the UK this year, a recovery is anticipated in the eurozone, while growth in the US and emerging markets is expected to moderate.
The UK economy: What about inflation?
Annual consumer price inflation across G20 economies is projected to gradually ease, declining from 5.9% in 2024 to 3.6% in 2025. This gradual decline offers some relief, with inflation expected to return to target levels in major economies by the end of 2025.
The OECD issues a cautionary note to the UK government, emphasising the need for financial sense and productivity-enhancing public investment.
With interest rates forecasted to decline gradually, there’s a call for strategic spending directed towards infrastructure, healthcare, and skill development.
The Office for Budget Responsibility (OBR) predicts a rebound in the UK’s growth rate to 1.9% next year, driven by significant declines in interest rates and inflation.
